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Ceiling on FDI in telecom to remain

Shyamal Ghosh, chairman of the Telecom Commission, today said he did not favour any increase in the foreign direct investment, or FDI, caps on basic and cellular services from the existing 49 per cent.

''Worldwide foreign investment in the sector is only 25 per cent,'' Ghosh said. He is also the secretary, Department of Telecom, or DoT.

His remark comes in the wake of a reported cabinet meeting two months back headed by Commerce Minister Murasoli Maran that the sectoral caps mainly in the basic and cellular services must be increased to 74 per cent.

Even the industry ministry under which the Foreign Investment Promotion Board, or FIPB, approvals are made is understood to be keen on keeping the existing ceiling of 49 per cent.

Speaking at a seminar on the Indian telecom industry, 'Comms reforms 2000', Ghosh said there is a major shake-out on the anvil in the Internet business in India with 270 Internet service providers, or ISPs, having taken licences.

''There will be a host of mergers and acquisitions soon.''

Meanwhile, Communications Minister Ram Vilas Paswan said, ''Telecom, which was a state monopoly, has now been opened to the private sector and foreign direct investment is being encouraged.''

Paswan said that already there are a number of private operators in cellular and basic telephony, and their presence would be noticed in broadcasting also.

Speaking at the seminar, Telecom Regulatory Authority of India, or TRAI, member R R N Prasad said there was a lot of confusion in the telecom sector because the regulatory body was set up only after licences had been given.

Mahendra Nahata, group chairman of Himachal Futuristic Communications Limited, today said that the sheer number of licences in the telecom sector will increase the costs and affect the customer.

Referring to licences, Nahata said, ''These artificial barriers will have to go.'' He said the government must leave all commercial decisions to the entrepreneurs and allow ''free play''.

On telecom equipment, he said local manufacturers must be encouraged. In China, 99 per cent of the equipment is locally manufactured and this leads to low prices.

Incentives, which are applicable to the private power sector, were not allowed in the telecom sector, he added. ''Even today, there are differential financial treatment by institutions who refuse to help achieve financial closures,'' he said.

Ashok Barat, regional director, South-Asia of Telstra India Private Limited, pointed out that commercial expediency must be given precedence over regulatory principles so as to make the industry healthier and encourage its expansion.

UNI

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